MSSP: Audit Technique Guides (ATGs)

The Market Segment Specialization Program (MSSP)
focuses on developing highly trained examiners for a particular market segment. A market
segment may be an industry such as construction or entertainment, a profession like
attorneys or real estate agents or an issue like passive activity losses. An integral part
of the approach used is the development and publication of Audit Techniques Guides. These
Guides contain examination techniques, common and unique industry issues, business
practices, industry terminology and other information to assist examiners in performing
examinations.

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This audit technique guide (“ATG”) was developed to support the field in the consistent development and application of penalties when a taxpayer was involved in an abusive tax shelter, including “technical” tax shelters. This ATG is a Service-wide document, discussing penalty policy and considerations applicable to all taxpayers involved in tax shelter transactions.

The Market Segment Specialization Program (MSSP) presents this Audit Technique Guide as an aid to compliance and enforcement strategies involving the Alaska commercial fishing industry. Although, the guide is specifically structured around the Alaska commercial fishing industry and catcher vessels, it may be used as a broad outline for commercial fishing MSSP efforts in any region. Tenders, processors, and brokers are addressed in Part Two. Alaskan Commercial Fishing Part One -- Catcher Vessels was written by the Examination Division, Anchorage District.

The Market Segment Specialization Program (MSSP) presents this Audit Technique Guide as an aid to compliance and enforcement strategies involving the Alaska commercial fishing industry. Although, the guide is specifically structured around the Alaska commercial fishing industry and processor and brokers, it may be used as a broad outline for commercial fishing MSSP efforts in any region. Catcher vessels are addressed in Part One. Alaskan Commercial Fishing Part Two - Processors and Brokers was written by the Examination Division, Pacific Northwest District.

Taxpayers who are not required to pay tax under the regular tax system may still be liable for tax under the Alternative Minimum Tax (AMT) laws. These laws create an equity in the system, requiring higher income individuals with certain deductions to pay tax. Without the AMT laws, these individuals would pay little or no tax while those with lower income levels and no deductions would pay higher tax.

This guide was developed by members of the Market Segment Speciality Program in Los Angeles to familiarize agents with some of the practices prevalent within the auto body and repair industry and share information on issues encountered during the study of this business segment.

One of the goals envisioned with this Audit Techniques Handbook is to achieve a high level of proficiency in the way we conduct our examinations of Automobile Dealerships. In addition, by establishing and maintaining close contact with other Industry Specialists, including the Motor Vehicle Industry Specialist, National Office, Appeals and District Counsel, we can maximize the effectiveness of our efforts.

The aviation market segment includes all persons involved in commercial and noncommercial air transportation. This group includes but is not limited to -- Scheduled commercial airlines, -- On-demand air taxi services, -- Charter airlines, -- Integrated package delivery companies, -- Travel agencies and tour brokers, -- Businesses and individuals that operate aircraft for their own use, -- Individuals who purchase airline tickets, and -- Marketers of fuel that is used in aircraft.

Noncompliance in the bail bond industry was initially identified in a project conducted by one of our districts through the Examination function. There appeared to be a relatively high incidence of nonfilers, and of those returns audited, there was often a lack of adequate books and records to support income and expenses claimed.

The Examination Specialization & Technical Guidance (ES&TG) initiated studies of specific industries in certain districts. As a result of these studies, Audit Technique Guides were written to assist revenue agent examiners with the examination of specific industries that have unique accounting systems, terminology, and operations unlike other industries. The 2002 ES&TG Audit Technique Guide for Bars and Restaurants (the ATG) replaces the prior guide for Bars and Restaurants that was last revised in 1995. Changes to the ATG were necessitated by the passage of the IRS Restructuring and Reform act of 1998 (RRA98), as well as advances in accounting technologies used by restaurants. This Guide also considers relatively new examination research techniques available to revenue agents, including the Intranet and Internet. In the areas of employment taxes and tip reporting, this Guide takes into account significant changes recently made to Tip Rate Determination Agreement (TRDA) and Tip Reporting Alternative Commitment (TRAC) agreement. Employers can now sign up for these agreements using the Internet. This Guide considers these changes in statutes, technology and practice as they affect the revenue agent and the bar and restaurant industry.

This beauty salon guide is composed of collective information from audits conducted in Las Vegas, interviews of salon owners, and contacts with the State Board of Cosmetology (Nevada, Oregon, and New Jersey). Provides an overview of the industry and techniques for reconstructing income when books and records are incomplete or non-existent.

Just as there are different kinds of bed and breakfast inns, the tax treatment of the inns will vary. IRC sec. 280A will come into play more often when you have a few rooms being rented out in a personal residence. Whereas, with an inn of 20 rooms it will not. IRC sec. 162 will govern because these are more like a hotel and motel business. Frequently, IRC § 183 will dominate because the taxpayer has not shown he is engaged in a activity for profit. One of the most common issues is personal use and/or expenses per IRC § 262, especially with food, utilities, and auto expenses.

Business Consulting is one of the fastest growing industries in the world today. This trend is a result of many changes occurring in the world economy. During the past two decades, the business community has been downsizing which has caused displacement of many workers. These displaced workers have created a growing industry now known as "consulting". Some of these former employees are now contractors who are engaged by the same company and/or industry which previously employed them.

This is a supplement to the Market Segment Specialization Program’s (MSSP) Construction Audit Technique Guide (ATG) and should be used in conjunction with the Construction ATG. This supplement is intended to be a reference for revenue agents and tax auditors in examining returns in the carpentry/framing subsegment, as defined below. Examiners should consult this material in both the planning and development phases of an income tax examination. The potential tax issues addressed may apply to proprietorships, partnerships, corporations, or S corporations.

This Market Segment Specialization Program (MSSP) guide was developed to provide excise tax agents with specific tools to examine issues relating to domestic produced coal. The guide provides guidance on 13 potential audit issues, general audit guidelines, sample IDR requests, a glossary of mining terms, and includes background information on the coal mining industry. The examples and the citations in this guide are based upon 2006 law. While some of the provisions of IRC sections 4121, 4216, and 6416 are explained, the primary focus of the module is not an in-depth explanation of the law, but rather a guide to audit issues.

The Detroit District formed a Financial Group in 1986 when it recognized the need to improve the quality of the examinations of both banking and insurance returns. Approximately one half of the agents in the group specialize in the audit of banks and savings and loans. The other agents specialize in the examination of life and casualty insurance companies. There is no formal specialized training for agents who audit financial returns. The agents learned to examine banks by studying the banking research services, by reviewing the ISP digest, and by working together. They regularly share with each other what they learn. Additionally, close contact is maintained with the National Banking ISP, Savings and Loan ISP, and National Office personnel. The Detroit District provides resources to attend ISP meetings and out-service seminars. They have also funded subscriptions to bank tax research services and several banking trade publications.

The purpose of this guide is to afford the examiner an opportunity to gain a better understanding of the commercial printing industry, and to provide a specialized examination tool, by focusing on the printing processes and the accounting and records flow associated with the business. During the examination of printing companies in Georgia, a pattern of similar issues was noted. As a result, an information gathering project was started to allow the Service an opportunity to gain knowledge of this very large manufacturing industry, to identify common areas of non-compliance, and to develop techniques and procedures to help promote compliance in the industry. The issues most frequently encountered were in cost of sales, particularly work-in-process, IRC section 263A, and omission of certain direct material items from inventory. Other issues included change in accounting method (from cash to accrual), sales cutoff, officer's compensation, and depreciation.

This chapter presents a discussion of inventory and cost of sales considerations encountered in the study of high tech electronics companies. We opted to emphasize audit techniques in this section, rather than detailed issue discussion, as a cost of sales audit may sometimes seem overwhelming to some examiners. Presentation of the material is divided into five sections: - General Background Information - Audit Techniques - Cost Analysis - Standard Cost Variance Treatment - Inventory Reserve Discussion.

This Industry Guide is intended to be used by examiners conducting audits in the construction industry and as information for taxpayers and practitioners associated with the construction industry. Review of this guide is recommended prior to initiating an audit. Users of this guide may need to augment these guidelines by researching specific tax issues and new tax law.

This audit technique guide is a supplement to the MSSP Construction Industry Guide. This guide addresses drywallers in their usual capacity of doing work as subcontractors and explains construction audit techniques in this context. Examiners should be familiar with the items shown in the Table of Contents of the MSSP Construction Industry Guide. Items that pertain to drywallers, such as employment tax issues, the cash to accrual accounting change issue are referenced therein. A familiarity with other items on the MSSP Construction Industry Guide Table of Contents is recommended so that examiners can identify and develop issues outside of the scope of this guide.

The purpose of this Market Segment Specialization Program (MSSP) Guide is: 1. To provide an overview of the activities encountered in audits of individuals in the entertainment industry. 2. To familiarize auditors with issues and terminology pertinent to individuals in the entertainment industry. 3. To assist auditors with their examinations by providing audit techniques.

This guide has been written to provide you with a general understanding of the farming operation. It is important to have an understanding of the various facets of a farm operation in order to adapt auditing techniques to different situations. Agriculture continues to be the major industry in many states. CAUTION: Agriculture is subject to both economic and weather fluxuations. Production and yeild differences may exist between different areas of the country or even within a state. Examiners need to be conscious of these elements that may affect the examination.

The initial interview can be an important tool for gathering information to access the potential for unreported income. Your goal in the interview is to gain an understanding of the farmer's operation. By ascertaining the capacity for production, you can determine the potential for unreported income from primary farm income. By determining the nature of the operation, you can determine the potential for by-products, waste, and other sources of income related to the farming operation. By determining the taxpayer's financial status you can better assess the potential for income from nonfarming sources.

Since the Los Angeles District began its audit specialization program, the goal has always been to provide examination employees (both field and office audit) with information on industries so audits could be performed in an efficient, effective, and intelligent manner. The purpose of this guide is no less. It is hoped that any examiner, who opens a furniture manufacturer, can use this guide to achieve optimum results.

This Audit Techniques Guide (ATG) was based on the findings of a team of agents who focused their examinations on individuals and businesses in the garden supplies market segment. The audits were performed to determine industry characteristics, potential issues, and compliance problems.

The original Garment Contractors examination information package was printed in March 1989 (for IRS use only), based on audits of approximately 25 different contractors. Subsequently, a revenue agent group specializing in garment industry examinations adopted that information package as a training tool and reference source. This current guide is a revision of the first which draws from the findings of that group's audits to expand upon, clarify, and update the original document.

The purpose of this Market Segment Specialization Program (MSSP) guide is to provide the examiner with general and technical background information and to recommend specific audit techniques to make future examinations of garment manufacturers more efficient and effective. Though some aspects of the exam will be no different than procedures and techniques used for other businesses, there are many other areas where industry information and specialized audit techniques can make a substantial difference in the final result of the examination.

Virtually all gasoline stations fall into one of two broad categories: majors and independents. Gasoline stations that sell branded gasoline (those who operate under the major brand names, such as Mobil, Shell, etc.), usually have signed agreements which restrict them from buying from anyone other than their respective major Oil Company. However, experience shows that some major retailers do buy additional gasoline or diesel fuel from independent distributors. The major Oil Company(ies) can operate branded locations. The dealer may own the property (—open dealer“) or may lease the station from the Oil Company(ies) (—dealer operated“). Sometimes diesel fuel can be purchased from independent suppliers; however, the pumps need to be clearly marked to indicate the diesel fuel product is not the major oil company‘s diesel fuel being sold. Independents are stations that go by any name other than those listed below. Independents are also referred to as "unbranded" stations. They purchase gasoline from anyone, including independent distributors as well as from major marketing departments. Frequently, an independent Oil Company(ies) also owns several gasoline stations. In some cases, it is obvious these stations are related. In other cases, the relationship is not obvious.

The livestock industry is as varied as any other area of farming and agriculture. Methods of bookkeeping within each operation will differ. Due to these variations, this guide provides a focus on the business of breeding, raising, buying, and selling livestock. This overview, along with the glossary and appendices, provide a basis for communicating with livestock farmers as well as their representatives. Regional differences, however, may result in oversights in terminology. Input from the readers will be invaluable in completing the usefulness of this guide.

This guide provides you with a general understanding of farming operations so you will have the expertise necessary to communicate knowledgeably with farmers and/or their representatives. Farm operations can be quite varied as to the products, operating cycles, and degree of sophistication. It is important to have an understanding of the various facets of a farm operation so you can adapt your auditing techniques to each different situation.

This audit technique guide was prepared by a Compliance 2000 Team consisting primarily of individuals from IRS's Examination, Collection, and Criminal Investigation Divisions, and the West Virginia Department of Tax and Revenue (WVDTR). It is based upon information gathered from a sample of examinations and historical data from throughout the nation. Input was also received from many third party sources such as other government agencies, trade associations periodicals, etc. The primary objective of this effort was to evaluate compliance within the hardwood timber manufacturing process from standing timber through delivery to the final processor and to develop a guide to be used as a reference tool by examiners. Further, this guide provides general and technical information which should be useful to examiners in the classification, pre-planning, and examination of returns in the hardwood timber industry.

The Market Segment Specialization Program (MSSP) Audit Techniques Guide (ATG) on IRC section 183 Farm Hobby Losses has been developed to provide guidance to Revenue Agents and Tax Auditors in pursuing the application of IRC section 183 with respect to horse activities and cattle operations. Historically, IRC section 183 has been a difficult issue to pursue. The development of the issue is a fact-gathering initiative. The application of IRC section 183 is based upon the examiner's understanding of the taxpayer's industry as well as the taxpayer's mode of operation within that industry. IRC section 183 and the accompanying Treasury Regulations do not provide absolute definition, but serve to provide guidance in formulating the facts into a conclusion.

Provides an explanation of water consumption analysis for reconstructing unreported income from the operation of a laundromat. The water consumption analysis based on water usage is a common sense approach to estimate revenue of a laundromat. In addition, specialists in the laundromat industry use the water consumption ideology to verify claims of gross receipts by laundry owners attempting to sell their businesses. Remember, water is a consumable product that goes somewhere, either to produce income or for other uses which we call waste. Articles in trade publications, letters from tax preparers, and other comments by practitioners have been critical of the analysis. None, however, have questioned the basic approach. They have questioned such things as water waste and gallons of water per wash load.

The information and techniques presented in this guide for lawsuit settlement examinations were developed during a project in Alabama, which began with media coverage of relevant tax issues. Analyses of newspaper articles revealed that numerous lawsuits were being resolved in the state either by verdict or settlement for substantial amounts. As a result, a separate project relating only to lawsuit verdicts and settlements was initiated and approved. Early results of the project revealed that the vast majority of these lawsuit verdicts and settlements were escaping taxation. Virtually none of the payments were reported on Forms 1099. For this reason, it has been easy for these payments to fall through the gap of unreported income.

This audit techniques guide has been developed to offer the examiner technical support for identifying and developing issues related to IRC section 42 in this area of tax law. The guide consists of chapters covering specific LIHC topics and issues. The chapters are arranged topically, with the various elements of the LIHC being introduced and discussed in the order in which they are generally encountered during the development of a project -- a building block format of terms and mechanics.

Overview of the industry. Emphasis on change of accounting method, IRC section 263A, and inventory. Special emphasis has been placed on changes in accounting methods, IRC section 263A, and inventory because they exist in most audits of a manufacturing business.

This Market Segment Specialization Program (MSSP) Guide contains industry specific data related to the Masonry and Concrete industries. It is intended as a guide for examiners when auditing entities related to this market segment or a general contractor who may have contracts that include masonry substructures. Before initiating their initial masonry or concrete market segment audit, it is recommended that the examiner have a thorough knowledge of the material contained in this guide and the Construction Industry MSSP Guide. The trades covered in this guide include the traditional brick layers as well as concrete block masons, concrete forming, placing and finishing, placing of masonry architectural details, and miscellaneous masonry details.

The purpose of this guide is to provide audit techniques to be used in the examination of taxpayers in the Mobile Food Vendors Industry. All of the initial returns comprising this industry study were selected with the focus on two types of food vendors: 1. Food Catering Trucks 2. Espresso Carts. As media attention touted the potential profitability of these businesses, it was observed that many street corner operations were operating at high volumes, principally in cash, and with little or no forms of internal controls. Recognizing the potential for income underreporting, projects were initiated to identify issues, determine the levels of compliance, and to developing audit techniques to assist examiners in future examinations.

The purpose of this guideline package is to give an overview of the mortuary and cemetery industry in the following areas: 1) How the industry is structured and its various functions. 2) What federal and state laws govern the industry. 3) Common industry terminology. 4) Accounting practices used in the industry for book purposes vs. proper tax treatment of various issues. 5) Tax law pertaining to the industry along with current trends affecting the industry as a result of current tax court decisions. 6) Suggested audit steps and documentation to review with regard to specific issues or accounts.

This music industry handbook will give the user an overview of the music industry. It generally will show: 1. How the industry is structured. 2. What is involved in making and marketing a record, tape, or compact disk. 3. How income is generated by artists and their operations. 4. Books and records that should be available in each industry segment. 5. Common industry terminology. 6. Accounting practices used in the industry versus proper tax treatment of various issues. 7. Suggested audit techniques regarding specific issues or accounts.

The purpose of this Market Segment Specialization Program (MSSP) audit techniques guide is to provide examiners reference material relating to the oil and gas industry for General Program examinations. This guide is a compilation of various sources offering a quick reference guide to examiners. Its intent is to supplement the oil and gas training material published and taught in formal training. Reference is not made to all of the facets or issues of the oil and gas industry. However, this guide will enable one to become familiar with the basic operations and common terminology of the oil and gas industry, including brief references to royalty owners. Examiners are still encouraged to continue to use the specialized audit techniques handbook (IRM 4232.8, Techniques Handbook for Specialized Industries -- Oil and Gas) and consult petroleum engineers when necessary, as well as other outside reference material written on the oil and gas industry.

This Market Segment Specialization Program (MSSP) Guide is designed to assist examiners in classifying and examining partnership returns. The focus is on issues that fall within sections 701 through 761 of the Code (Subchapter K). Subchapter K deals primarily with the formation, operation, and termination of partnerships. Many issues arise during the initial or final year of the partnership. If your return relates to an operating business (as opposed to rentals), you should also look for an MSSP Guide for that type of business.

The Audit Technique Guide (ATG) on Passive Activity Losses (PAL) has been significantly revised to reflect an issue-based format. Additionally, it has been updated to encompass current emerging issues, changes to Form 8582, Passive Activity Loss Limitation, and recent case law. The guide was developed to provide Revenue Agents and Tax Compliance Officers with technical information and tools to examine issues relating to both income and losses from passive activities. This text provides specific guidance on potential audit issues along with summaries of the applicable Internal Revenue Code (IRC) and Federal Tax Regulations (Regulations) and highlights of common errors. We have attempted to write this ATG in plain layman’s language, addressing issues which may be encountered on an audit. The text is not all encompassing and does not cover every exception. The IRC § 469, the related Regulations, and case law may have to be researched.

A project was conducted by the Providence District on the pizza industry. Because pizza restaurants are basically cash businesses, the potential for skimming exists. The type of entities discussed in this guide are the family owned mom and pop types of establishments. The "chain" or "franchise" types of pizza parlors are not addressed in this guide due to the nature of their operations, that is, the close control maintained by the franchise of these establishments does not lend itself to the approaches discussed in this guide. Overall, documentation of income and expenses in this industry has been found to be lacking. In most instances, the cash register tapes are not retained and income is not deposited intact. There is generally little or no documentation to verify the gross receipts reported on the tax return. Purchases are often paid in cash and the purchase invoices are not kept. Employees are often paid in cash, sometimes, in order to avoid the payroll taxes.

Placer mining is a special opencut method for exploiting deposits of sand or gravel containing workable amounts of valuable minerals. Native gold is the most important placer mineral, but platinum and tin are also found in gravels. Minerals also include zircon, diamond, ruby, and other gems. The Market Segment Specialization Program (MSSP) presents this manual as a guideline for the examinations of taxpayers in the Placer Mining Industry. This guide focuses on small mining operations represented as sole proprietorships on Schedule C, but it can be adapted for partnership and corporate returns.

The purpose of this guide is to highlight issues that are specific to or have a large impact on the poultry industry. Most of the issues in this guide relate directly to the major companies rather than the individual farmers. However, one chapter has been devoted to the issues normally found in conjunction with a poultry grower audit. For more general issues concerning individual farmers, please refer to the MSSP Grain Farmers (3149-122), TPDS #83960J. The poultry industry has come a long way from the individual farmer hand raising a small number of birds. It is dominated by multi-million dollar vertically integrated corporations that contract with individual farmers to grow company owned birds under strict company guidelines. The United States is a large player in this industry but it is by no means the top producer. There are several specialized segments of the poultry industry which require different techniques and knowledge of the examining officer. The following is a brief outline of these segments as they exist in the chicken and turkey industries and to a lesser degree in the duck and geese industry.

Following is a list of the audit ssues which appeared to be common within this industry: 1. There were large numbers of nonfilers. 2. Circumvention of employment tax liabilities and worker's compensation premiums by failing to file employment tax returns, paying wages in cash, and classifying all payments to workers as subcontractor payments. 3. Employees in this industry are issued Forms 1099 for the above reasons. These individuals offset their Form 1099 income with expenses -- either paid by them or their employer, and subsequently qualify for a earned income credit. 4. Sums of large amounts of income. Internal control is usually poor and leads to underreporting of income earned from Federal and State agencies, from other contractors, private companies, or other unrelated business activities. 5. Poor accounting records lead to unsubstantiated expenses. Reforestation contractors contend that they do not have the expertise to maintain quality books and records. 6. Returns are being prepared by unlicensed preparers. A preparer reported that he was being paid for bookkeeping services, not for preparing tax returns, and, therefore, was not required to sign the returns.

Prior to 1976, there existed no tax incentive to rehabilitate or preserve historic buildings. The Tax Reform Act of 1976 added IRC section 191 which permitted taxpayers to amortize over a 60-month period certain expenditures to rehabilitate property listed in the National Register of Historic Places or property located in Registered Historic Districts and certified as significant to the district.

The retail gift shop industry includes numerous entities of various sizes that are engaged in the business of selling gifts, cutlery, cookware, novelties, watches, wearable art, decorative accessories as well as seasonal (for example, Christmas), commemorative, specialty and collectible items.

The purpose of this Audit Technique Guide is to provide guidance on conducting income tax examinations in the retail industry. It incorporates procedures and techniques that have been shown to be practical or unique to the retail industry that will be combined with the examiner’s good judgment, skill and experience to complete the examination within the shortest possible time with the least burden possible to the taxpayer. Use of these techniques does not imply that the object of the examination is to find a deficiency, but rather to determine whether the reported income and expenses has been accurately reported. Because the facts and circumstances of each taxpayer are unique, the procedures applied will be slightly different in every examination, and the strategy will remain dynamic. The examiner will combine the techniques that apply to each specific case and apply his or her basic knowledge to the practical situation at hand.

Prohibition was repealed with the adoption of the Twenty-first Amendment in 1933. The Amendment also gave each state the right to restrict the importation of alcoholic beverages. Since then, each state has developed their own statutory framework for regulating the sale and consumption of alcoholic beverages within their jurisdiction. This audit techniques guide was developed in the State of Massachusetts which has its own unique set of laws and regulations regarding the sale and consumption of alcoholic beverages. It should be noted here that any agents auditing a liquor store in a different state should familiarize themselves with that particular state's rules and regulations.

This audit technique guide was written and compiled, by and for Internal Revenue agents, to be used in the examinations of returns of the scrap metal industry. These examinations include returns for both purchasers and sellers of scrap metal. The purpose of the guide is to promote uniformity and consistency in examinations and in the application of tax laws.

Scope: A number of Code sections pertain to loans. The various Code sections provide guidance in addressing arm's length concerns, the timing of interest recognition, and the allocation of interest and principal. This guide addresses only issues regarding loans to shareholders.

Focuses on major league franchises. Potential issues may include revenue (sponsorship, broadcast, season tickets), strike fund payments, stadium issues, player contracts, purchase/sale of franchise, league expansion, etc.

The purpose of this guide is to identify potential issues that impact the swine industry. From the small farm operation to the largest of corporations, similar basic concepts can be encountered by examiners. The guide is designed to traverse all swine operations and to explore areas that may be pertinent to your particular case based upon type of entity and size.

The purpose of this text is to provide the examiner information on the operation and business practices of the tobacco industry and to recommend specific audit techniques for the examinations of tobacco farmers, dealers, and warehouses. The information presented is a product of a number of in-depth examinations performed by four experienced agents.

The tour bus industry includes a variety of transportation companies, including charter tours, scheduled daily tours, airport shuttle, limousine service and car rental agencies. Most of these companies are licensed by the city in which they operate and controlled by the Public Utilities Commission or a similar governing body. There are both national and local companies. In one district we found that many of these operators are paying commissions for referrals or reservations made by hotel concierges and bell staff. Often commissions are paid in cash and no Form 1099 is issued. Management of one major national franchise indicated that paying cash commissions and not issuing Form 1099 is customary throughout the United States. The tour industry maintains the practice of paying commissions to hotel employees, or others, in order to encourage customer referrals. The competition for customers is very intense within the tour bus industry, with the majority of customers being hotel guests.

Veterinary practices are part of the health care industry. Preparation of this ATG included consideration of the Los Angeles District information package entitled “Healthcare Industry.” The package was useful because medical procedures, record maintenance, terminology, and audit issues are similar.

The Sacramento District formed the wine industry study (WIS) as part of the MSSP. The wine industry was selected because of its uniqueness to, and overall economic impact on that district. The wine industry, for purposes of the study, was defined as the wine making operations in Northern California. While the study focused on wineries, some vineyard operations were included. The information contained in this package represents information developed and issues raised during examinations within this industry.

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